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No Hiding Place for Anyone

Embedded in bank notes or designer labels, the ''mu-chip'' can beep out the owner's location and details to marketers and thieves alike. The Hitachi chip is the world's smallest wireless identification device.
Economist Staff, The Economist
September 20, 2001

In today's information age, everybody leaves an electronic trail in their wake. With every credit-card purchase, ATM transaction, telephone call and Internet logon, they create an electronic portrait of themselves that grows clearer at every step. Perhaps the only items that are still untraceable are people's clothes, cash and day-to-day movements. But with the introduction of Hitachi's new "mu-chip", even these could become common knowledge.

The Hitachi chip is the world's smallest wireless identification device. It measures 0.4 millimetres square and is thin enough to be embedded in paper. It can hold only 128 bits of read-only memory, and do little more than spit out a unique identification number, when asked, to a distance of about 30 centimetres. It uses the same frequency band (2.45 gigahertz) as such longer-range wireless networking technologies as Bluetooth and 802.11b. But with the mu-chip's tiny size come some large implications.

Until now, size and production cost were the main obstacles that stopped companies from embedding identification chips in everyday items. But Hitachi has managed to create an integrated circuit that is not only tiny but cheap. The company expects a single chip to cost less than ¥ 20 (16 cents). Originally, the chip was built in an attempt to foil counterfeiters. It is small and thin enough to be woven into paper, and folding does not harm it. In combination with a bar-code reader, the chips can prove the authenticity of money or official documents, thwarting counterfeiters before they have even begun.

The chip has captured wide attention. The day after Hitachi unveiled it, Mu-Solutions, an in-house venture company founded in Tokyo to market the device, had more than 400 telephone enquiries. Mu-Solutions has now formed partnerships with some 40 companies around the world.

Ryo Imura, boss of Mu-Solutions, knows there is a large market out there — in everything from securities to retail sales. The Gap, a clothing chain for the young based in San Francisco, is interested in the chip for its marketing potential. The company wants to integrate the chip into its clothing labels, so that when a customer buys a pair of jeans, or a little black dress, that information will be sent straight to the company's database. Expensive brands, such as Gucci or Chanel, could use the chips to inhibit cheap imitations. Hospitals could use the chips as patient-identification tags.

The tiny Hitachi chip, however, could feed a number of privacy concerns. Although the chip now requires a separate machine to read it, future incarnations will doubtless be able to communicate wirelessly. Embedded in cash, central banks could monitor the flow of paper money, determining who has spent what and where — a function that credit cards already perform. Identity chips could even be embedded in valuables, so that they could be tracked in case of theft.

But the mu-chip is a Pandora's box, believes Lee Tien, an attorney at the Electronic Frontier Foundation (EEF), a San Francisco-based organisation that specialises in the conflict between technology and personal rights. Although he has no intention of demonising the Hitachi chip, it is nevertheless an example of how surveillance technology is getting cheaper all the time.

Overtones of Big Brother may not be the only problems. If tiny chips woven into money and other valuables were constantly announcing their whereabouts, a thief would know precisely which person or home to rob. By the same token, chips in clothing — linked to their owner's identity at the time of purchase — could mark the wearer's location anywhere on earth.

The EEF's Mr Tien points out that, by definition, privacy means not being watched, or known about, or listened to. These new chips may therefore constitute a direct infringement of personal privacy. Whether they are challenged — in much the same way as the Intel Pentium II processor's ID numbers were — remains to be seen. For now, Hitachi claims to be unconcerned. The chips will be available from the end of 2001, with annual sales forecast to reach $145m by 2005.

Copyright © 2001 The Economist Newspaper and The Economist Group. All rights reserved.




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